PacifiCorp said Tuesday it had signed an agreement with the California Independent System Operator Corporation to work toward creating a real-time energy imbalance market by October of 2014.

The two entities operate the largest transmission systems in the West, and if the agreement is implemented, they would end up buying and selling blocks of energy in a real-time energy imbalance market. Such markets, which allow utilities to balance short-term energy needs over wider geographic areas, are seen as one way to reduce costs, ensure reliability and integrate intermittent sources of power such as wind and solar as those resources become a larger part of the overall generation portfolio. Ballooning wind and solar power generation require grid operators to keep more of their own flexible generation in reserve to fill in for variable output when weather dictates, PacifiCorp said.

The Northwest has been slow to cooordinate its balkanized transmission system to cope with those issues, though officials at PacifiCorp and the Bonneville Power Administration are leading an effort to study an energy imbalance market in this region. BPA's customers have historically been reluctant to join bigger transmission organizations for fear of losing control over the federal agency's assets.

The California ISO Board will vote on the agreement in March. PacifiCorp said the agreement does not preclude other similar discussions with industry groups in the West.